Pirelli To End Chinese Investor's Control Over Governance

Pirelli’s board is expected to approve a shareholder agreement that formally establishes that its largest investor, China's state-owned Sinochem, does not exercise control over the tire maker, Italian daily Il Messaggero reported, according to Valentina Za and Giulio Piovaccari for Reuters.

The accord states that Sinochem holds no dominant influence over Pirelli’s governance, as decisions are made by the company’s management. I Photo: Pirelli Facebook

Chinese and Italian shareholders have been at odds over Pirelli’s governance, with Sinochem seen as a hurdle to the company's U.S. expansion ambitions. Under the reported agreement, Sinochem will retain its 37% stake in Pirelli but will no longer be deemed to exercise control for regulatory purposes.

The accord states that Sinochem holds no dominant influence over Pirelli’s governance, as decisions are made by the company’s management. Earlier this month, Pirelli had put U.S. investment plans on hold while working to ease tensions related to Sinochem’s ownership stake.